Hostess' Bankruptcy Won't Kill Twinkies, Say Specialists

A sign taped on the door of a Hostess plant is seen in St. Louis Friday. If Hostess Brands Inc. wins U.S. Bankruptcy Court approval to liquidate its assets, it is likely to encounter substantial demand for its portfolio of iconic baked goods such as Twinkies and Wonder Bread.
Reuters

The baked-goods company Hostess Brands Inc. is unlikely to survive the next stage of the bankruptcy process, but the future is still looking plenty bright for many of its iconic brands, such as Twinkies.

Hostess announced Friday it will be seeking U.S. Bankruptcy Court permission to liquidate its assets, which include its many popular brands, such as Ding Dongs, Ho Ho’s, and Wonder Bread, as well as Twinkies. Even as the company itself shuts down, however, these brands are likely to survive.

"Can you imagine what Twinkies will go for? Jiminy!" a person who wished to remain unidentified because his firm planned to bid to be the liquidator told Reuters. "And Wonder Bread? These are 100-year-old brands. They have to be worth a lot."

In a bankruptcy filing this year, Hostess assessed the value of its intellectual property and trademarks at about $135 million, Reuters reported. With the recent uproar over Twinkies possibly disappearing from the marketplace, it is appears likely Hostess will be able to find a suitable buyer for it.

"The brands are valuable and will certainly be sold," David Pauker, an executive managing director and restructuring specialist with New York-based Goldin Associates LLC, told Reuters.

Pauker, who has considerable experience in the food industry, added: "They will most likely be purchased by a competitor that will bolt the additional sales to a better and more efficient delivery system. The company itself won't survive."

Hostess executives blame the impending liquidation on a strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union that they say would drain the company of resources.

While Hostess and the International Brotherhood of Teamsters were able to come to an agreement, the company and the bakers’ union were unable to do so. More than 18,500 Hostess employees are likely to lose their jobs as a result of the liquidation.

Pauker told Reuters some of Hostess’ bakeries will likely remain open after being sold to a buyer (or buyers), but most will probably be closed for good. He noted prospective buyers are likely have plenty of bakeries themselves.